According to Federico Benito Don, energy and climate manager at the European Steel Association (EUROFER), the European steel sector continues to face its most serious energy crisis four years after the start of the Russian-Ukrainian war. Electricity and natural gas prices remain two to three times higher than those of competitors in the United States, India, China, as well as in the Middle East and North Africa (MENA). At the same time, the decarbonization path of the sector, which depends on access to abundant and affordable energy that does not contain fossil fuels, is under increasing pressure.
By 2030, the European steel industry is expected to require about 165 TWh of non-fossil fuel electricity and 2 million tons of renewable hydrogen per year to support the transition. More than 60 low-carbon steel projects are planned across Europe, representing a potential reduction in carbon emissions of 80 million tons, equivalent to a 55 percent reduction from 1990 levels. However, consistently high energy costs put these investments at risk.
High energy costs continue to put pressure on the industry
Dona stated that the problem goes beyond wholesale electricity prices, which still exceed 85 euros on average./MWh compared to the historical level of about 45 euros/MWh. Industrial consumers are also facing rising indirect ETS costs, expressed in electricity prices, doubling of grid tariffs for network operation and expansion, increased balancing and adjustment costs caused by limited system flexibility and storage capacity, as well as higher costs for ensuring the safety of electricity supply.
He also noted that the European hydrogen economy was developing more slowly than initially expected. Hydrogen production capacity remains limited, infrastructure deployment is behind schedule, and the present cost of renewable hydrogen remains at 7-12 euros/kg. As a result, many steel producers have limited capacity to decarbonize their production processes and reduce carbon dioxide emissions.
The steel industry remains strategically important
Dona emphasized that steel remains essential for construction, automotive, defense, packaging, and energy transition, including applications such as wind turbines.
